ECB chief Mario Draghi (front centre) addressing a joint Oireachtas committee yesterday
With an average interest rate of 3.15% compared to a Euro zone average rate of 1.77%…
…Mario Draghi, head of the European Central Bank – addressing the Oireachtas Finance Committee – described the lending market here as being in a ‘monopoly or quasi-monopoly situation’.
…The ECB chief also rejected suggestions that the bank presses member state lenders to dispose of non-performing loans in fire sales.
He was responding to Sinn Fein’s Finance spokesman Pearse Doherty who asked if the ECB was pressuring banks to sell NPLs onto vulture funds.
Mr Draghi said the ECB didn’t have a preference as to how the banks reduce their problem loan levels. He said they have to examine the details of all proposals, including, as Mr Doherty suggested, a NAMA-type arrangement for the purchase of NPLs from the banks.
Mr Doherty said the high level of non-performing loans here was a legacy of the refusal of the ECB to allow the government to burn bondholders, which cost the Irish people dearly.
Mr Draghi said he did not want to engage in a reconstruction of the past.
Paul Murphy TD grills the European Central Bank’s Mario Draghi over the bailout and his predecessor’s threat to the late Finance Minister Brian Lenihan during an appearance by the ECB chief at a Joint Oireachtas Finance Committee meeting.
The Irish economy has seen a particularly strong expansion in recent years. Ireland is now growing at the fastest pace of any euro area country,” he said.
“Unemployment has been falling too, and now stands well below the euro area average.
“This is all the more impressive given the severe crisis Ireland went through and the legacies it is dealing with, including high private debt and arrears.”
He said policies need to put in place to protect the exchequer and deal with “legacy vulnerabilities” in the system – especially the level of non-performing loans.
The organisers, a group called Blockupy – named after the Occupy Wall Street movement in 2011, estimated that about 10,000 demonstrators were at the rally. Thousands came into the German financial capital from other parts of Europe.
“Our protest is against the ECB, as a member of the troika, that, despite the fact that it is not democratically elected, hinders the work of the Greek government. We want the austerity politics to end,” Ulrich Wilken, one of the organizers, said. “We want a loud but peaceful protest,” he told Reuters.
Greek Prime Minister Alexis Tsipras and finance minister Yanis Varoufakis
Germany and its allies are ready to let Greece leave the euro unless Prime Minister Alexis Tsipras accepts the conditions required to extend his country’s financial support, according to Malta’s finance minister, Edward Scicluna.
Greece’s creditors are cranking up the pressure on Tsipras as he seeks a deal to prevent his country defaulting on its obligations as early as next month. By bowing to German demands, the premier risks a domestic backlash from voters and party members whom he’s promised an end to austerity.
As Greece heads toward 11th-hour funding talks with its euro-area membership on the line, bondholders are surprisingly sanguine about its failure so far to secure a deal.
Forget the strategists at Commerzbank AG who say there’s a 50 percent chance it’ll leave the currency bloc, and those at Barclays Plc who put the exit risk higher even than in the 2012 debt crisis. The Bloomberg Greece Sovereign Bond Index shows those with money at stake aren’t seeing a significant increase in the chances of a euro-zone departure….
… It is the position of the [ECB] Governing Council that it is only if we receive in writing a commitment from the Irish government vis-a-vis the Eurosystem on the four following points that we can authorise further provisions of ELA [emergency liquidity] to Irish financial institutions:
1) The Irish government shall send a request for financial support to the Eurogroup;
2) The request shall include the commitment to undertake decisive actions in the areas of fiscal consolidation, structural reforms and financial sector restructuring, in agreement with the European Commission, the International Monetary Fund and the ECB;
3) The plan for the restructuring of the Irish financial sector shall include the provision of the necessary capital to those Irish banks needing it and will be funded by the financial resources provided at the European and international level to the Irish government as well as by financial means currently available to the lrish government, including existing cash reserves of the Irish government;
4) The repayment of the funds provided in the form of ELA shall be fully guaranteed by the Irish government, which would ensure the payment of immediate compensation to the Central Bank of Ireland in the event of missed payments on the side of the recipient institutions.
I am sure that you are aware that a swift response is needed before markets open next week, as evidenced by recent market tensions which may further escalate, possibly in a disruptive way, if no concrete action is taken by the Irish government on the points I mention above.
Portion of a letter sent to then Finance Minister Brian Lenihan from ECB President Jean Claude Trichet on November 19, 2010